A psychiatric hospital chain is diversifying into rural health clinics and plans to open at least a dozen facilities this year.
The effort appears to be the first by an investor-owned hospital company to open a chain of rural health clinics, the number of which have ballooned because of the higher Medicare reimbursement they receive.
New Orleans-based Ramsay Health Care, which owns 18 psychiatric hospitals, has purchased Rural Health Care Centers of America, a Chattanooga, Tenn.-based consulting firm that specializes in hospital-based rural health clinics. Terms of the transaction weren't disclosed.
Ramsay hasn't revealed exactly how many clinics it intends to open.
Craig Sarine, Rural Health's president, said the potential for growth is so large that it's more a matter of deciding "where to focus our efforts."
To receive the higher Medicare reimbursement, rural health clinics must operate in areas that are medically underserved or where a shortage of health manpower exists. Mr. Sarine noted that 143 of Georgia's 159 counties carry that designation. "By and large, the whole country is medically underserved," he said.
Mr. Sarine said it costs about $250,000 to open a rural clinic, including $150,000 in initial capital and short-term operating subsidies.
It's not surprising that an investor-owned chain would target rural health clinics, said Bill Finerfrock, executive director of the National Association of Rural Health Clinics, Washington. Currently, about 1,500 rural health clinics are in operation, three times the number that were in business about three years ago (Nov. 15, 1993, p. 82).
"I've gotten calls from the big accounting firms and Wall Street people that see the business opportunity," Mr. Finerfrock said (See related story, p. 82).
Opening clinics in underserved areas will benefit rural locales, he said. However, "my concern is there have been folks in the past that saw opportunity in rural areas, then went in and bled it dry and got out. Investors in rural areas have to make a commitment to the community."
Ramsay initially intends to open the rural health clinics in markets near its psychiatric hospitals. Although the clinics will provide primary care, not psychiatric care, they might generate referrals for the Ramsay hospitals as well.
"Sixty percent of all behavioral healthcare problems are seen by primary-care doctors first," said Reynold Jennings, Ramsay's chief operating officer.